On the Omnichannel Bandwagon

While some of Gangadi’s ventures ended in failure, his decision to go omnichannel has paid off. It was a calculated risk on MedPlus’ part—going omnichannel strictly in those states where it was legally allowed. Today, its online channel contributes between 16-17% of MedPlus’ revenue, says Mantena.

MedPlus’ approach was unlike e-pharmacies, which took the risk of going pan-India, or Apollo, which initially chose to only sell over-the-counter drugs online. Up to 5% of Apollo Pharmacy’s revenue now comes from its online channel, said the executive quoted above.

Banking on the franchisee model

Having made a strong start online, MedPlus now wants to expand its online channel pan-India as the government has promised regulations on e-pharmacies imminently. According to Mantena, MedPlus wants to earn as much online as it does offline, even as it plans to expand to 3,000 stores in the coming years. The 3,000 store-projection is also a markedly more achievable target than those the company set in the past. Back then, it was banking on a franchisee model—another of Gangadi’s ideas that failed to find wings.

MedPlus isn’t alone in its omnichannel ambitions. The country’s largest e-pharmacy by revenue, Medlife, is also planning for an omnichannel existence. It plans to bolster its presence by establishing outlets in major cities over the next few years.

Up until the financial year ending March 2018, MedPlus’ online operations were outearning Medlife. While the latter earned revenues of Rs 138 crore ($19.8 million), with expenses of Rs 300 crore ($43 million), MedPlus online arm netted Rs 338 crore ($48.5 million), helping the company turn a tidy profit.

Now, Tushar Kumar, co-founder, and CEO of Medlife wants to turn the tide. Kumar wants Medlife to become the top e-pharmacy in the country, and he’s using everything at his disposal to get there. Aggressive marketing, including TV advertising and discounts, and additional services.

He’s also bringing this aggression to Medlife’s omnichannel aspirations, hoping to replicate MedPlus’ success. But both—the largest e-pharmacy and the second-largest offline pharmacy—have taken very different approaches to building an omnichannel pharmacy chain.

Crossing swords

Over the last few months, Medlife ran a pilot scheme where it linked a few offline stores in Mumbai with its online operations. It also recently closed an acquisition deal with a pharmacy chain in Delhi that has 40 outlets. Kumar says that he is in final talks to acquire two other offline chains in south India as well.

Kumar is aiming for two things with his omnichannel setup. First, reducing the average delivery cost of Medlife’s online pharmacy from Rs 35 (50 cents) to Rs 20 (28 cents) by using physical stores as delivery centers. This is why Medlife is only eyeing going offline in large cities, as 75% of its revenue comes from tier 1 cities.


Secondly, he hopes to sell more medicines for acute illnesses as well. Currently, medicines for chronic conditions account for the bulk—some 70%—of Medlife’s sales. The company also acquired medicine delivery startup Myra in Bangalore last month. Myra specializes in express deliveries, using technology to bring delivery times under two hours. He plans to leverage Myra’s tech across cities in the near future. Offline pharmacies, coupled with the express delivery expertise Medlife’s acquired, should help the company sell more medicines for acute and emergency care.

In all of this, however, Kumar will eventually have to dial down the company’s heavy discounting. From initial days of 30% discounts, he says he has brought discounts down to around 20% while still managing double-digit growth.

As the offline and online worlds collide and combine, though, both MedPlus and Medlife will need to find new tricks to remain relevant. And Gangadi’s more maverick ideas may actually find their moment in the sun.

Thinking outside the box

“He sees every aspect of the business—supply chain, warehouse, pharmacies and online—independently, not deeply and coherently as a healthcare business,” said one consultant who worked with Gangadi.

But executives this consultant worked alongside to develop MedPlus’ pharmacy business and supply chain were thrown off by Gangadi’s constant tinkering. He introduced new models like aligning with diagnostics and even primary care in quick succession.



Leave a Comment